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Commission grants collective bargaining authorisation for Waikato – Bay of Plenty Chicken Growers Association

21 December 2017

The Commerce Commission has granted authorisation to allow members of the Waikato - Bay of Plenty Chicken Growers Association Incorporated to collectively bargain with Inghams Enterprises (NZ) Pty Limited.

The Association, on behalf of members, asked for authorisation to collectively negotiate the terms and conditions under which its members supply chicken growing services to Ingham’s. 

After consulting on its draft determination, the Commission reached a view that while it is likely that the proposed collective bargaining arrangements would lessen competition, any reduction in competition is likely to be outweighed by the public benefits. 

Commission Chair Dr Mark Berry said the Commission did not receive any submissions in opposition to its draft decision. “The collective bargaining proposed interferes with the normal competitive process of individual growers independently negotiating their supply terms with Ingham’s. However, there are benefits from these collective negotiations, including reducing the cost of multiple growers arranging individual supply contracts with Ingham’s."

“We found the detriment would be limited and growers would be able to opt out of any collective arrangements and continue to contract individually if they wished,” Dr Berry said.

The written reasons for the decision can be found here.

Background

Waikato – Bay of Plenty Chicken Growers Association 

All of the members of the Association are farmers providing chicken growing services to Ingham’s. The Association, on behalf of its members, sought authorisation to collectively bargain on the terms and conditions under which its members supply chicken growing services to Ingham’s.  

Ingham’s 

Ingham’s is one of the largest chicken processors in New Zealand. It outsources its chicken growing requirements to contract growers located in close proximity to its processing plant near Ngarua. Ingham’s has never obtained growing services from a grower who was not a member of the Association or who was located outside of the Waikato or the Bay of Plenty regions. 

Authorisation requirements

The Commission may grant authorisation under section 58 of the Commerce Act for certain arrangements that may otherwise breach section 27 of the Act if satisfied that the public benefits of the arrangement outweigh the detriments arising from the loss of competition. The granting of this type of authorisation protects the applicant from court action by the Commission and private individuals.